Sarbanes Oxley Act of 2002 created because several reasons, below the major reason this list taken from from Wharton Financial Institutions Center, an independently managed site at the Wharton School of the University of Pennsylvania.
The environment triggering corporate scandals
- Take over movement, equity compensation linked executives’ interest to the share price.
- Motivations to meet market expectations among concerns.
- Long term bull market effect (1994-2000),
- Specifically, the reasons for failure of gatekeepers’ e.g. Auditors, lawyers, analyst… in the scandals. (deterrence, bubble)
- Investors` position in that environment is also considered.
Enron Case, as a main model to enlighten the objectives of the SOA the short timeline of Enron’s fall and the comments about the role of participants provided.
- Enron when its stock price was $90 in August 2000, was America’s 7th largest company, (more…)
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Confuse implementing SOX IT Section, here is six question that every SOX auditor should answer
1. Has the organization established an IT-specific internal control framework to guide its section 404 compliance activities with respect to IT?
An IT-specific internal control framework provides vital structure to an organization’s effort to develop and maintain effective internal control in its IT environment. Failure to identify such a framework may indicate that the organization has failed to examine IT controls as systematically or as deeply as required to support section 404 compliance. One possible IT-specific control framework to build upon is the CobiT framework, described by the IT Governance Institute in its 2000 publication, “Control Objectives for Information and Related Technology.” While the full CobiT framework goes far beyond section 404 compliance requirements, companies seeking guidance regarding IT controls would be well advised to customize the applicable portions of CobiT for their own particular section 404 compliance needs.
2. Is the IT environment highly customized?
Custom-built applications and platforms are a fertile ground for internal control issues for two reasons. One, the original technology’s vendor may not be able or willing to provide technical support once its product has been significantly modified. And two, no matter how competent a company’s IT personnel or service providers, there’s always a much higher risk of errors in new, untried software than in standardized, widely used, and well-tested software.
3. Does the IT department have a high turnover rate?
Technology specialists, as a group, tend to gravitate toward best-of-breed, sophisticated, cutting-edge IT environments. A high turnover rate among IT professionals may indicate their dissatisfaction with dated, refractory technology whose unreliability could compromise internal control effectiveness.
4. Is there a large backlog of outstanding program maintenance requests?
If your IT professionals, though competent, are having trouble keeping up with program maintenance requests, chances are that the systems are overly complex and tedious to work with, casting doubt on their reliability with regard to internal control. (more…)
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